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V_Basic Appraisal Principles > Chapter 16 - Market Analysis > Flashcards

Chapter 16 - Market Analysis Flashcards

1
Q

“The study of the supply and demand in a specific area for a specific type of property.”

is definition of _________

A

Market analysis

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2
Q

Market analysis is defined as:

A

“The study of the supply and demand in a specific area for a specific type of property.”

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3
Q

“Buyers and sellers of particular real estate and the transactions that occur among them.”

is definition of __________

A

Real property market

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4
Q

Real property market is defined as:

A

“Buyers and sellers of particular real estate and the transactions that occur among them.”

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5
Q

A property’s _______ is the area from which its demand is found and that contains its direct competition.

A

market area

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6
Q

The objective analysis of observable and/or quantifiable data indicating discernible patterns of urban growth, structure, and change that may detract from or enhance property values; focuses on four sets of considerations that influence value: social, economic, governmental, and environmental factors.”

is definition of _______

A

Market area analysis

(also referred to as neighborhood analysis)

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7
Q

Market area analysis is defined as:

A

“The objective analysis of observable and/or quantifiable data indicating discernible patterns of urban growth, structure, and change that may detract from or enhance property values; focuses on four sets of considerations that influence value: social, economic, governmental, and environmental factors.”

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8
Q

Earlier in the course, we studied the four major influences on value: governmental, economic, social, and environmental. All these forces occur at various levels: (4) __________

A

national, state, regional, and local

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9
Q

“A division of a total market that reflects the preferences of a particular set of buyers and sellers, e.g., fast food restaurants as a submarket of the overall restaurant market.”

is definition of ____________

A

submarket

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10
Q

A submarket is defined as:

A

“A division of a total market that reflects the preferences of a particular set of buyers and sellers, e.g., fast food restaurants as a submarket of the overall restaurant market.”

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11
Q

Examples of submarkets within total residential market:

A
  • Single-unit
  • Two- to four-unit
  • Multi-unit
  • Old houses
  • New houses
  • Starter homes under $100,000
  • Mid-range homes between $100,000 and $300,000
  • Luxury homes in excess of $300,000
  • Condominiums
  • Apartments
  • Townhouses
  • Suburban houses
  • Rural houses
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12
Q

“The process by which submarkets within a larger market are identified and analyzed.”

is definition of _________

A

Market segmentation

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13
Q

Market segmentation is defined as:

A

“The process by which submarkets within a larger market are identified and analyzed.”

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14
Q

Disaggregation is defined as:

A

“The differentiation of a subject property from other properties on the basis of subclassifications with differing product characteristics.”

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15
Q

“The differentiation of a subject property from other properties on the basis of subclassifications with differing product characteristics.”

is definition of _____________

A

Disaggregation

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16
Q

“Buyers and sellers of particular real estate and the transactions that occur among them” is the definition of a(n)

  • market value
  • real estate market
  • feasibility analysis
  • microeconomics
A

real estate market

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17
Q

A subject property’s market area would be defined as

  • its neighborhood
  • within 1 mile of the subject in an urban area, and within 10 miles in a rural area
  • the area from where demand comes and that contains its competition
  • the geographic area within five miles of the property
A

the area from where demand comes and that contains its competition

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18
Q

“A process for examining the demand and supply of a property type and the geographic market area for that property type” is the definition of ____________ analysis.

  • highest and best use
  • microeconomic
  • feasibility
  • market
A

market

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19
Q

What process would an appraiser use to identify submarkets within a larger market?

A

market segmentation

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20
Q

Which field of study focuses on the economics of individual firms, industries, or consumer segments?

  • highest and best use
  • microeconomics
  • macroeconomics
  • feasibility analysis
A

microeconomics

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21
Q

Which field of study focuses on the economy as an aggregate system, considering national/domestic income, the supply of money, the rate of inflation, and the national budget?

  • demographics
  • microeconomics
  • macroeconomics
  • absorption
A

macroeconomics

22
Q

Demand Analysis

In applying the appraisal process to residential properties we may research and analyze factors such as:

A
  • Population trends
  • Income and wage levels
  • Employment types and patterns
  • Unemployment rates
  • Mortgage information
  • Land use patterns
  • Physical factors
  • Local government
23
Q

Supply Analysis

In supply analysis we may research and investigate:

A
  • Existing stock
  • Volume of new construction
  • Planned construction - new building permits
  • Availability and price of vacant land
  • Costs of construction
  • Properties offered for sale
  • Conversions in progress
  • Availability of financing
24
Q

An absorption rate is defined as:

A

“Broadly, the rate at which vacant space in a property or group of properties for sale or lease has been or is expected to be successfully sold or leased over a specified period of time.”

A residential absorption rate may predict that there is a sustainable need for an additional 500 units per year

25
Q

“Broadly, the rate at which vacant space in a property or group of properties for sale or lease has been or is expected to be successfully sold or leased over a specified period of time.”

is definition of:

A

absorption rate

26
Q

An absorption period is defined as

A

“The actual or expected period required from the time a property, group of properties, or commodity is initially offered for lease, purchase, or use by its eventual users until all portions have been sold or stabilized occupancy has been achieved.”

27
Q

“The actual or expected period required from the time a property, group of properties, or commodity is initially offered for lease, purchase, or use by its eventual users until all portions have been sold or stabilized occupancy has been achieved.”

is definition of:

A

absorption period

This is a crucial time frame for developers. If I build 30 new houses, how long will it take until they are all sold? Developers or entrepreneurs have to lay out many expenses up front for the initial site development and construction. They have to build the buildings, access roads, incur site development costs, and then carry the property including taxes and insurance costs before the first dollar of return comes back from property sales. It makes a big difference to the developer’s bottom line if the units will be sold out in two months or two years.

28
Q

A marketability analysis is defined as:

A

“A study of how a specific property is expected to perform in a specific market. A marketability analysis expands on a market analysis by addressing a specific property.”

29
Q

“A study of how a specific property is expected to perform in a specific market. A marketability analysis expands on a market analysis by addressing a specific property.”

is definition of: ________

A

marketability analysis

30
Q

A feasibility analysis is defined as:

A

“The study of a cost-benefit relationship of an economic endeavor.”

31
Q

“The study of a cost-benefit relationship of an economic endeavor.”

is definition of ___________

A

feasibility analysis

32
Q

A large local employer announces plans for immediate expansion, which will add 400 new jobs. There are only 180 houses available for sale in the market at this time. What is MOST likely to happen in the near future?

  • the number of building permits issued will increase
  • a “buyer’s market”
  • the new jobs will displace old service industry jobs, so there will be no net gain
  • property values will decline gradually
A

the number of building permits issued will increase

33
Q

In an urban market, an appraiser may note a trend of converting

  • apartments to condominiums
  • large single-unit homes to multi-unit apartments
  • apartments to co-ops
  • all of these
A

all of these

34
Q

If you are trying to determine the number of existing single-family residences in a local municipality, your best source of this information would be

  • Yellow Pages
  • assessor’s office
  • local MLS
  • large local employers
A

assessor’s office

35
Q

Researching and analyzing the number of new building permits issued is primarily an element of __________ analysis.

  • supply
  • demand
  • feasibility
  • macroeconomic
A

supply

36
Q

True or False? Availability of financing is part of supply analysis because builders and developers need to be able to obtain financing in order to build homes or buildings.

A

True

37
Q

True or False? While material costs vary greatly throughout the United States, labor costs do not vary with location.

A

False

38
Q

“The rate at which vacant space in a property or group of properties has been or is expected to be successfully sold or leased over a specified period of time” is the definition of a(n) __________ rate.

  • feasibility
  • absorption
  • prime
  • saturation
A

absorption

39
Q

“An analysis of the market conditions of supply, demand, and pricing or the demographics of demand for a specific property type in a specific area” is the definition of

  • market study
  • comparative market analysis
  • appraisal
  • demographic study
A

market study

40
Q

Identifying the most probable user for a particular type of property is a component of ___________ analysis.

  • economic base
  • macroeconomic
  • supply
  • demand
A

demand

41
Q

In residential properties, which would NOT be a factor in demand analysis?

  • income and wage levels
  • mortgage information
  • building permits issued
  • land use patterns
A

building permits issued

42
Q

Market areas are defined in terms of

  • competition
  • geography
  • financing availability
  • sellers
A

competition

43
Q

In commercial properties, which would NOT be a factor in demand analysis?

  • construction costs
  • per capita income
  • rates of sales retention
  • percentage of household income spent on retail
A

construction costs

(Construction costs would be a supply factor.)

44
Q

Which of these would NOT be a submarket of the market for residential properties in Anytown, USA?

  • starter houses under $60,000
  • residential properties
  • rural houses
  • new houses
A

residential properties

45
Q

“The differentiation of a subject property from other properties on the basis of subclassifications with differing product characteristics” is the definition of

  • aggregation
  • disaggregation
  • subdivision
  • layering
A

disaggregation

46
Q

“The objective analysis of observable and/or quantifiable data indicating discernible patterns of urban growth, structure, and change that may detract from or enhance property values is the definition of

  • growth analysis
  • market area analysis
  • highest and best use analysis
  • feasibility analysis
A

market area analysis

47
Q

Which of the following would NOT be considered in supply analysis for a residential property?

  • income and wage levels
  • number of building permits recently issued
  • existing stock of homes
  • availability of financing
A

income and wage levels

Income and wage levels would be a demand factor

48
Q

Identifying the most probable user for a particular type of property is a component of ___________ analysis.

  • economic base
  • macroeconomic
  • supply
  • demand
A

demand

49
Q

A market analysis examines the supply and demand for ___________, while a marketability analysis examines ___________ .

A

a type of property

a specific property

50
Q

Which of the following would NOT be considered in supply analysis?

  • existing stock
  • conversions in progress
  • properties offered for sale
  • population trends
A

population trends

V_Basic Appraisal Principles (19 decks)

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